Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs
While transport costs have fallen, the empirical evidence also points at rising total trade costs. In a model of industry location with endogenous transaction costs, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade.
April 2005 Paper Number CEPDP0683
This CEP discussion paper is published under the centre's Trade programme.